President of Ukraine

Yermak-McFaul's expert group has developed a roadmap for energy sanctions

10 May 2022 - 10:51

The international working group on sanctions on Russia headed by Andriy Yermak, Head of the Office of the President of Ukraine, and Ambassador Michael McFaul, Director of the Freeman Spogli Institute for International Studies (FSI), presented the second document, The Energy Sanctions Roadmap: Recommendations on Sanctions on the Russian Federation.

Following the presentation of the Action Plan on tightening sanctions on Russia, an international expert group continued its work and prepared a document detailing energy sanctions, helping governments and companies around the world formulate proposals for sanctions on Russia. The application of energy sanctions should increase the cost of invading Ukraine for Russia and help the Ukrainian state protect its territorial integrity, freedom and democratic values.

The authors of the roadmap for energy sanctions point out that Russia's budget is based on revenues from the sale of energy, primarily to European countries. Since February 24, the European Union has paid about $ 800 million daily for Russian oil and gas.

The document contains recommendations for political action that will help deprive Russia of this income, minimizing disruptions in markets and the world economy.

The expert group supports the decision of the European Commission to impose a total ban on imports of all Russian oil, and substantiates the gradual embargo on gas imports from Russia. In addition, experts provide suggestions, including specific mechanisms, on how to ensure the managed phased implementation of such a ban, while minimizing profits from Russian oil exports during the transition period. Such mechanisms may be considered a priority by individual countries. The case is about a regulated import tax (or tariff) and keeping funds for energy on a special escrow account.

Particular attention has been paid to additional sanctions to prevent circumvention of restrictions imposed on the energy sector. In particular, these are targeted sanctions against maritime export service providers bypassing the controlled sales regime.

In addition, the roadmap proposes the strategy to prevent the consequences, which makes Europe independent of Russian energy and counters the use of energy resources as weapons.

The document also emphasizes the importance of disconnecting Russia from financial flows from gas exports, as Europe pays Russia much more for gas than for oil during the war.

The expert group emphasizes that the European embargo on Russian energy should be part of a coordinated strategy of the EU and the United States, which will include synchronous diplomatic steps and cooperation with stakeholders in the private sector.

Members of the Yermak-McFaul international expert group call on governments, as well as public and private companies, to take the roadmap as a basis for further public promotion of energy sanctions against Russia to deprive it of the opportunity to finance an unfair war of invasion against Ukraine.